New car list price increases ‘slipped in alongside VAT rise’, reports CAP

Two thirds of motor manufacturers raised their car list prices in January, an addition increase to that caused by introduction of the 20% VAT rate.

The figures are revealed by car pricing expert CAP.

Two out of three manufacturers increased basic list prices by more than the additional VAT figure, raising average prices by £142.74.

CAP new vehicle data manager, David Saville, said: "Historically, tax-driven changes to car manufacturer price lists have often been used as an opportunity by manufacturers to realign their ranges and push through additional price increases.

"The latest change to 20% VAT in January was no exception. In summary ? of the manufacturers appear to have slipped in basic list price increases of an average of £142.74 alongside the VAT rise. One third of manufacturers have decreased their basic list prices by an average of £108.73. Therefore the net effect across a sample of 4,966 model variants was an average increase in January of £66.31.

"When the additional 2.5% of VAT is applied, this represents an average new price increase of £79.57.

"Drilling down into the detail, European manufacturers have applied the heaviest increases, whereas Japanese and Korean manufacturers have made minimal adjustments averaging around £10, meaning the main change their customers will see is the 2.5% VAT increase."

January 2011 new car list price increases